23 Jul Yorkshire LTA Fraud Highlights Need For Self Checking Procedures
The latest in a recent spate of club official frauds in sport has again highlighted the need for clubs and associations to ensure that they have some basic checking in place to protect club funds from fraudsters.
The treasurer of Yorkshire Lawn Tennis Association stole almost £300,000 from them over a period of six years and was this month sentenced to two years imprisonment. Basic checks and procedures were not in place which enabled the fraud to take place over the six years and the association also made the decision not to report the matter to the authorities when they first realised what was happening in 2012, despite having identified the amount then missing to be over £70,000.
Whilst the vast majority of club officials do a fantastic job at their respective clubs, all clubs should have basic self-checking procedures in place to ensure that club funds are safeguarded. You only have to search for the words ‘club’ and ‘fraud’ on the internet to realise that the Yorkshire LTA case is not an isolated one and that the fraud is almost always down to lax or non-existent checking procedures at the club.
Committee members of clubs that are set up as unincorporated associations should be aware that they could be personally liable for any debts resulting from a club fraud. Committee members of clubs set up as a corporate body (such as a company limited by guarantee) could also be held personally liable if they are found to be negligent in their legal duty as a company director for not having implemented satisfactory financial procedures.
We visit a number of clubs during the year to advise on their procedures and a worrying number of them do not have basic procedures in place. Here is our quick guide to the procedures clubs should consider putting in place to minimise the chances of a fraud at their club:
- Set up a Finance sub-committee to assist the Treasurer and to ensure that details on the club finances are known/verified by more than one person.
- Ensure cheques must be counter signed for amounts over a set minimal limit, e.g. £100, and that amounts over a second limit such as £500 can only be paid with Board approval.
- Ensure any online payments/banking are made according to the same procedures and that online security details are kept secure and changed on a regular basis, with the proviso that said details are known by more than one member of the committee.
- Do not permit blank cheques to be signed/counter-signed by any member of the committee.
- Ensure the Treasurer provides a monthly bank reconciliation with copies of the bank statements, detailing any debts not yet paid by the club.
- Ensure all members of the Finance sub-committee have sight of the regular bills issued to the club, e.g. utilities, telephone, rates, etc. to ensure they are being paid.
- Ensure that the end of year accounts are independently verified by an external qualified accountant and that a second committee member confirms that said accounts have been verified by the accountant.
- Send the end of year accounts to members BEFORE the AGM (they should be sent out with the AGM notice) and that the accounts are then duly approved by the members at the AGM.
- Ensure that there is a clause in the club constitution to enable any member to inspect the accounts with due notice if they wish to do so.
- Ensure all payments to volunteers are made only on receipt of a completed claim form which details the expenses they are being reimbursed for.
- Ensure that all payments for services are only made on submission of a valid invoice and that any payments are subject to the cheque issuing rules as detailed herein
These are some of the basic procedures clubs should consider and these should be detailed in the club’s Financial Procedures manual.
Contact us if you need further clarification or visit our support centre for further free expert online advice and support.